WASHINGTON, Jan 14 (Reuters) - The Commodity Futures
Trading Commission has rarely been known as the tough cop on
the beat. But now a former Goldman Sachs executive and a
one-time foe of regulation is moving to change all that.

The CFTC, under the stewardship of Gary Gensler, announced
on Thursday proposals to limit the role big traders have in
U.S. energy markets, all with the aim of curbing so-called
excessive speculation in commodity markets.

Gensler, dogged by his opposition during the Clinton
administration to regulating some exotic financial instruments,
has enacted a series of tough moves to rein in high-flying
commodity markets with an eye to showing Congress he's serious
about increasing market oversight.

"There is no doubt that there has been a significant change
in what he was thinking ... and the approach he has brought to
his new job," said Michael Greenberger, a law professor at the
University of Maryland and a former CFTC official.

The Senate confirmed Gensler in May, but only after the
Obama administration unveiled a proposal to reform the $58
trillion over-the-counter derivatives market -- widely blamed
for amplifying the recent economic meltdown.

Gensler's approval had been blocked for months by two
senators who expressed skepticism that he was ready to get
tough on the financial sector from whence he came.

An avid marathon runner and father of three daughters,
Gensler became a partner at Goldman Sachs at the age of 30
before becoming a top official at the U.S. Department of
Treasury from 1997 to 2001.

Much of the concern over Gensler centered around his work
at Treasury on a 2000 law that exempted the credit default swap
market from oversight.

In his defense, Gensler has admitted he and other officials
made a mistake and "should have done more to protect the
American public through aggressive regulation, comprehensive
regulation."

After convincing members of Congress that he has distanced
himself from his regulatory past, experts say Gensler has
quickly become a trusted name for lawmakers looking for help as
they craft regulatory reform legislation.

"Congress is looking to him for leadership and guidance as
they're developing in legislation, which are very complicated,
and need guidance from a stable, informed, reliable expert. And
I think Gary has served that role," said Greenberger.

During Gensler's time at the CFTC, the agency has started
aggressively using new authority provided by Congress that
gives it more oversight over certain contracts listed on exempt
commercial markets.

But not all are optimistic that Gensler is leading the CFTC
in the right direction.

Craig Pirrong, a finance professor at the University of
Houston, said Gensler's aggressiveness on position limits is
not supported by evidence and may exceed the agency's purview.

He also questioned Gensler's push for tougher oversight of
the over-the-counter derivatives market and whether he fully
understands the problems that could occur.

"I agree that he's hit the ground running," said Pirrong.
"I just completely disagree with the direction in which he's
running."

Some analysts doubt whether the new position limits will be
tough enough to rein in trading on the energy markets or
whether the rules will be enforced effectively.

Already the CFTC has increased oversight of ICE's natural
gas contract and proposed exercising similar authority on
others, including the carbon spot contract on the Chicago
Climate Exchange.

The CFTC also has partnered with the U.K. Financial
Services Authority to increase supervision of energy markets
through greater information sharing and surveillance.

However, the FSA said recently that, while it supported
curbing market manipulation and price volatility, it was
skeptical whether this would happen if position limits were in
place.

Since its creation by Congress in 1974, the CFTC has
languished as an underfunded regulatory agency in Washington
with a staff and budget that paled in comparison to its big
regulatory cousin, the Securities and Exchange Commission.

Gensler is leading an agency that was heavily criticized by
lawmakers for failing to rein in runaway speculation that sent
commodity prices, including oil, corn and soybeans, to record
highs in 2008.

Commodity prices have fallen since then, but lawmakers
still want to beef up the CFTC and other regulatory bodies in
case prices take off again.

Gensler advised Democratic Senator Paul Sarbanes on the
Sarbanes-Oxley corporate reform law and was a senior advisor
for the presidential campaign of Hillary Clinton, now Obama's
Secretary of State. He also has been an outspoken critic of the
mutual fund industry, and co-authored a book, "The Great Mutual
Fund Trap."
(Additional reporting by Charles Abbott; Editing by Russell
Blinch and Jim Marshall)

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